A national survey of working age low- and middle-income households by public policy organization Demos finds that they accrue credit card debt because of a lack of insurance coverage, expenses for children and unemployment.

The report, "The Debt Disparity: What Drives Credit Card Debt in America," counters the belief that irresponsible spending habits fuel credit card debt.

Results of the survey include:

  • Households where a member has gone without health insurance at some point in the last three years are 20% more likely to be carrying credit card debt.
  • Households that include children under 18 years of age are 15% more likely to be carrying credit card debt than childless households.
  • Households where someone has been unemployed for at least two months in the last three years are 14% more likely to be carrying credit card debt than households that were not hit by joblessness.

The report offers policy recommendations on building the public safety net, medical debt protection, increased financial regulation and enforcement of accurate credit reporting, as well as banning credit checks as hiring criteria.

"We see that, among similarly situated low- and middle-income households of working age, factors like education, value of assets to fall back on, insurance coverage and whether a household member has lost a job are among the foremost predictors of whether a household will accumulate credit card debt," according to the report.

Adds Amy Traub, Demos senior policy analyst and author of the report, "As incomes for many Americans fail to keep up with costs during this period of slow economic recovery, credit cards can become a high-interest 'plastic safety net' that enables households to make ends meet."



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